The role of test automation in Agile Software Development projects is of paramount importance. It is absolutely necessary to automate tests on agile projects as the number of test cases will continue to grow with each successive sprint. Through a Grounded Theory study involving 38 agile practitioners from 18 different software organizations in India, we identified five key challenges faced by agile practitioners and different strategies to overcome those challenges while practicing test automation. Understanding these challenges and strategies would help agile teams in streamlining their test automation practices.